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Bajaj Auto Riding Strong on XCD-125CC

September 12, 2007

Bajaj Auto launched 125-cc ‘XCD’ at a price of Rs 41,000.The product is aimed at upgrading entry-level segment customers to 125-cc bikes from existing 100-cc bikes. Bajaj plans to manufacture 20,000 units of the new product, ramping it upto 50,000 units by November 2007. Bajaj Auto has a margin of Rs 3,000 / bike. Hero Honda’s Super Splendor is the only bike in this segment and is priced at Rs 44,000.

The launch of ‘XCD 125’ to stem the decline in Bajaj’s motorcycle volumes and
improve market share for Bajaj. We had reported that Bajaj recorded a 22% yoy decline in domestic motorcycle sales on a year-to-date basis.The success of the bike is critical to Bajaj as it shifts its focus towards high-end bikes.

Kotak retains outperform rating on the company with a price target of Rs 2,750.

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